Fed Must See Higher Prices Before Another Rate Hike

Fed Must See Higher Prices Before Another Rate Hike

Fed Must See Higher Prices Before Another Rate Hike

$DIA, $SPY, $QQQ, $VXX

The Federal Reserve should wait until there are clear signs that American paychecks and prices are rising before raising interest rates again, a Fed bank president and FOMC voter, said Monday, warning that moving too fast would be a policy “misstep.”

Chicago Federal Reserve Bank President Charles Evans, who votes this year on monetary policy, said he broadly agrees with his colleagues who believe rates should rise gradually to about 2.7% over the next 2 years or so, from the current range of between 1 and 1.25%.

But he said inflation, running at 1.4% by the Fed’s preferred gauge, is too low, and voiced concerns that low inflation expectations will keep it from rising toward the Fed’s 2% inflation goal.

“We need to see clear signs of building wage and price pressures before taking the next step in removing accommodation,” Chicago Federal Reserve Bank President Charles Evans said in remarks prepared for delivery to the Economic Club of Grand Rapids. “A gradual and cautious approach continues to be the appropriate strategy.”

His comments are in stark contrast to the confident tone adopted by William Dudley, President of the New York Fed, who earlier Monday said inflation weakness is fading.

My take here at HeffX-LTN is in line with that of Mr. Evans.

Monday, the US major stock market indexes finished at: DJIA -53.50 at 22296.09, NAS Comp -56.33 at 6370.59, S&P 500 -5.56 at 2496.66

Volume: Trade on the NYSE came in at: 842.3-M/shares exchanged hands

  • NAS Comp +18.3% YTD
  • DJIA +12.8% YTD
  • S&P 500 +11.5% YTD
  • Russell 2000 +7.0% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.37) Bullish (0.32) Bullish (0.33) Bullish (0.46)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.26) Neutral (0.12) Bullish (0.33) Bullish (0.33)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Neutral (0.14) Neutral (0.12) Neutral (-0.06) Bullish (0.36)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.42) Bearish (-0.37) Neutral (-0.23) Very Bearish (-0.67)

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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